CPA-AUDITING practice question 2 of 35

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that:

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Answer options

A: Payments to employees are computed at authorized rates.

B: Employees work the number of hours for which they are paid. Correct answer

C: Segregation of duties exists between the preparation and distribution of the payroll.

D: Internal controls relating to unclaimed payroll checks are operating effectively.

Correct Answer:

B. Employees work the number of hours for which they are paid.

Explanation

Choice "b" is correct. By vouching to time card data, the auditor is testing the existence assertion for hours worked. Choice "a" is incorrect. Vouching to approved time card data would provide evidence about hours worked, not pay rates. Pay rates would be tested by comparing to personnel records. Choice "c" is incorrect. Vouching to approved time cards does not provide evidence about segregation of duties. Choice "d" is incorrect. Vouching to the approved time cards does not provide evidence about internal controls related to unclaimed paychecks. The auditor would need to observe a payroll distribution to evaluate these controls.

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